European Ponzi Goes Full Retard As EFSF Found To Monetize... Itself

Tyler Durden's picture

We have long mocked and ridiculed the Fed for being the ultimate ponzi instrument: after all, why worry, when your central bank will buy up almost three trillion in US paper in about 2 years (a very comforting fact for US politicians who never have to fear that those trillions in new porkbills, pardon fiscal stimulus programs, may end up without funding). Well, as it turns out those wily veteran bankers from across the Atlantic have just one upped America yet again. According to the Telegraph, the abysmal, and barely successful, 3 EUR billion issuance of EFSF bonds (which was originally supposed to be 10 EUR billion, on its very very gradual climb to 1 EUR trillion) had one more very curious feature to it, aside from confirming that it is Dead On Arrival as expected. It turns out that in addition to being the most convoluted and complex creation ever conceived by JPM which is advising Europe on coming up with structured finance products that are so complex nobody will ask any questions and will automatically assume someone else has done the homework, it is also the quintessential ponzi instrument. The Telegraph reports that the already reduced 3 EUR billion "target was only met after the EFSF resorted to buying up several hundred million euros worth of the bonds." You read that right: in its first bond issuance since its transformation to the European Bank/Soveriegn Bailout Swiss Army Knife, the EFSF not only failed to raise a minimum token amount, but also had to... buy its own bonds. We can assume that the money the EFSF needed to fund said purchase came from the money growing tree, as at last check the ECB was still not funding the EFSF with crisp, new zEURq.PK equivalent binary 1s and 0s. But at least we all know what happens when the global ponzi goes full retard.

More on this surreal story which will be promptly buried in the barrage of Monday headlines because an international advisor to Goldman Sachs is now in charge of Italy.

Sources said the EFSF had spent more than € 100m buying up its own bonds to help it achieve its funding target after the banks leading the deal were only able to find about €2.7bn of outside demand for the debt.


The revelation will be seen as a major failure and a worrying sign of future buyers strike after EFSF officials and their bankers had spent recent weeks travelling the world attempting to persuade key investors, including China's national wealth fund and Japanese government funds, to buy its bonds.

And just in case one monetization vertical was not enough, Europe used, well, all the other ones it could:

Other European Union funds are also understood to have supported the EFSF's bond sale. The failure of the EFSF will increase pressure on the European Central Bank to effectively become the lender of last resort for the eurozone, a move it has strongly resisted.


At a private breakfast organised by PI Capital last week, Mark Hoban, the Treasury minister, said: "What it doesn't do is provide the next stage of the solution, which is how do you stop this from happening again?" he said.


The move, by the European Investment Bank, will cause more disquiet among non-eurozone EU members who have become concerned about their growing exposure to the cost of rescuing the currency bloc.

The explanation, for anyone whose brain just exploded, is that despite the marionette rotation at the top, the math of Europe is still not only absolutely hopeless, not to mention meaningless, but somehow just got even worse, because take away the magical powers of modern finance to be one with the ponzi, and Europe would have already imploded.

It also means that our earlier observation that the EFSF is an AA+ equivalent credit instrument has to be revised: pro formaing out the ponzi, means it is at best AA if not A, and most likely D if one takes away all the magic bells and Keynesian whistles, unicorns and other end of the western financial world loopholes that modern finance is forced to resort to every single day to mask the fact that every country in the developed world is now 100% bankrupt.

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Chris Jusset's picture

I bet Charles Ponzi never imagined that he would become the role model of every central banker in the world.

dlmaniac's picture

I'll cover my monthly mortgage payment this way.

redpill's picture

Oh, you're one of the three people still making them?

flacon's picture

Transforming "nothing" into "something". Creation ex-nihilo. I thought only God could do that... oh... I forgot... Lord Blankfein is God's fat little cherub and can do it too. Turns out there are fat little cherubs in Europe too - just doing "God's work".

trav7777's picture

wtf, is the EU delusional enough to think there are actually cash size buyers out there willing to buy into a supranational CDO like the EFSF??!?  The ONLY BUYER of paper at this point is a CB.  They can't be stupid enough to think that there is more leverage out there to be had from the general economy.

Would YOU buy into a CDO composed of one nation (Germany) that has a freakin budget under control when the entire rest of the union (inc France) cheated and lied their asses off to get in?

There isn't another sovereign in the EU that won't be discovered to have done the same cashflow swaps as Italy did to cheat under the deficit tagets, besides Germany.

sqz's picture

The move, by the European Investment Bank, will cause more disquiet among non-eurozone EU members who have become concerned about their growing exposure to the cost of rescuing the currency bloc.

Uh, woot?!

Could be a bit more specific about EIB's involvement here, if it is anything other than operational.

French Frog's picture

This weekend, on one side you have the Europe's supposed saviour (the EFSF) that is found to be useless and on the other hand you have Silvio resigning (which at a stroke makes all of Italy's problems disappear lol) ... as far as the money markets are concerned, this should make for a very bullish coming week.

If enough participants see/hear enough news that can 'justify' a bullish stance, then they can perpetuate the whole circus for another day/week .... For a while (forever?), it hasn't been about what IS happening (in front of you or in the background) but how to manage the illusion!

MillionDollarBonus_'s picture

It's understandable that doomer crackpots would have a tough time understanding this move by the EFSF, but in order to reach their level of intelligence you need to think outside the box. If you just think for a moment, this move makes PERFECT sense. What the EFSF has done is deliberately issue bonds in a quantity in which they did not expect to find sufficient bidders. They then buy the unsold bonds themselves to create the impression of a more successful auction. Market participants refuse to recognise the genius of the EFSF, and hence they need to be confused into believing in it for their own good.



Dick Darlington's picture

Just when i thought that it's nearly impossible to push more shit into the world packed full of shit, here comes MDB with a huge truckload of fresh shit. I think now would be an appropriate time to raise the "full retard" card once again.

ratso's picture

There is a difference between going broke and being worth less.  As long as a country can print money it is not officially broke - just increasing ly worth less.  Now the Eurozone on the other hand, that's a different matter....

derek_vineyard's picture

i called my son a retard for putting carbonated soda in the freezer.....his friends mom heard me and i was arrested for child endangerment and hate crimes

Pegasus Muse's picture

The world financial system is constipated with fiat ponzi paper and bankster scams like an impacted colon is with shit.  It's enema time.   

So are there big leadership changes in store for Italy and Greece?  Nah.  News bosses same as the old ones:  

Global Insights
Fri, Nov 11, 2011


jcaz's picture

No question, MDB- you've reached a "new" level of intelligence....

Now run upstairs and tell your mommy that you're winning on this board....

knukles's picture


Perfection is an illusion of arrogance.

knukles's picture


Here's what let's do, MDB.

You write a check off of your very own checking account.  Write it to yourself.  Take said check and deposit it into your own checking account off of which you just wrote it.  What have you accomplished?  Nothing, except wasting paper, ink and time.

Now annonce to world that you have solved your financial problems by virtue of said activity.  What have you accomplished?
Confirmed our suspicions that you're barin-damaged. 
(Or else a paid for by fucking who knows or cares to try to sway opinion.... Well, we always need somebody to ridicule, so thanks anyway.)

And, having acted as your JP Morgan to your ESEF, you can write me a check for $1,000,000. 



Estrella's picture

He is good. You really do have a gift.

Comay Mierda's picture

Twilight zone. I'm going to learn how to live by eating my own shit.

Zero Govt's picture

it's an ever decreasing circle of lower nutrient shit 

Sarkozy is full shit, Merkal is shit on toast and the British Govt wants in on all this shit just as it hits the fan

friggin clueless lot politicians

redpill's picture

Biying your own bonds, how very masturbatory!

Karl Tashjian's picture

Self improvement is masturbation. Now self destruction...

Al Gorerhythm's picture

The very meaning of circle jerk.

Fidel Sarcastro's picture

The EFSF just did a Ron Jeremy.

Pitchman's picture

Chris Jusset said: "I bet Charles Ponzi never imagined that he would become the role model of every central banker in the world."

And the inevitable result:


Life After An EMP Attack: No Power, No Food, No Tr...

RiverRoad's picture

Isn't it comforting and assuring to know that JPM is doing the same advising for the EU that Goldman did for Greece?  

tmosley's picture

And here I was hoping for a Futurama reference.

"Like I'm going to take lessons in not messing with the timeline from Mr. I'm-My-Own_Grandpa!"

The Big Ching-aso's picture



I think the whole world is going cueballs.



phungus_mungus's picture

Just how BIG is that crack rock the EU is currently smoking? 

midtowng's picture

It's the final stages of a Ponzi scheme breaking down.

The thing, we are talking about what was once considered to be the 2nd world reserve currency.

This will be HUGE.

Hansel's picture

I thought this was most awesome when I came across it too.  With the newly installed technocrats in Italy, Greece, and at the ECB, I doubt they care that they are sniffing their own brand.

CClarity's picture

Agree.  The financial system has become a sham and nothing is safe.  And they did it purposefully.  But we'll find them on their private islands.  Look what is happening to "leaders" in the Middle East, North Africa, and the latest "resignations" in Greece and Italy.  Pap and Berlesque are hoping they'll be spared the gallows this way.

Drunken Monkey's picture

Someone explain to me again why Madoff is in prison?

lolmao500's picture

He screwed some very important people. You don't do that or else you're done.

Screwing millions of little people? Sure. Screw one ``big`` shot of a few hundreds thousands or a million? You're gone.

DoChenRollingBearing's picture

One way or another yes he will.  He can drag out the time until trial, and then Obama pardons him.  That of course assumes he makes it to trial, instead of Secretary of the Treasury.

mind_imminst's picture

Yep, Corzine will walk. The NYTimes and Obama will make sure of that. Not only will he walk, he will probably become a Senator, governor, or bank president again.

Calmyourself's picture

If there comes a reset, corzine will be jack, queen or king of spades

Jim in MN's picture

The music stopped and there weren't enough chairs.  Coulda happened to any Ponzimeister.


Tick, tock....

kaiserhoff's picture

And will happen to them all.

Tick, tock....

Josh Randall's picture

EFSF is literally playing with themselves in front of everyone - no shame guys ?

Karl Tashjian's picture

These people have no shame. They're European.

moskov's picture

EU leaders acting like Marie Antoinette in Beijing and patronizing the Chinese to give them the ''free lunch'', and threatening if you don't give us the money then your export will explode. Chinese answered: Well, F__k yeah, let it explode like your euro then. It's worth of the money. We don't care.


and they are calling China got a slap in the face by making a offer rejected by these pathetic losers? lol.... it makes my day

Subprime JD's picture

Only a fucking fool wouldn't own gold given all the monetization of debt that is taking place. And thank god this world is full of fools as this leaves more gold for us. Print away, motherfuckerz.

philipat's picture

I predict that CB/PD will knock Gold down again in low volume trading in the Sunday overnight session.